Another craft beer, restaurant chain files Chapter 11 bankruptcy

According to The Street, Craft beer-themed restaurants like BJ’s and Yard House have found a winning formula, combining quality craft beer with a variety of food offerings. While large national chains have seen success, smaller regional craft beer restaurants have faced significant financial challenges, particularly in the aftermath of the COVID-19 pandemic.

BJ’s and Yard House: Success Amidst Challenges

BJ’s Restaurants (BJRI) started as a Chicago deep-dish pizza joint in Southern California in 1978 before shifting its focus to craft beer. With 216 locations nationwide, BJ’s has become a staple in the U.S. craft beer scene. On July 25, BJ’s reported earnings that exceeded analysts’ expectations, causing shares to rise as much as 10% to $38.87 on July 23, though they later fell back to $29.49 due to broader economic concerns.

Yard House, founded in Southern California in 1996, is another successful chain with over 100 beers on tap and 88 locations across the U.S. Owned by Darden Restaurants (DRI), Yard House has also navigated the challenges posed by the current economic environment.

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Struggles of Smaller Craft Beer Chains

While BJ’s and Yard House thrive, smaller craft beer restaurant chains have not fared as well. Rising interest rates, inflation, and a reduction in customer spending have made it difficult for these smaller operations to stay afloat.

One such example is Melt Bar & Grilled, a regional restaurant chain specializing in gourmet grilled cheese sandwiches and craft beers. Founded in 2006 in Lakewood, Ohio, Melt expanded to 14 locations by 2017 but faced financial troubles during the COVID-19 pandemic. On June 14, Melt filed for Chapter 11 bankruptcy protection, citing inflation-driven food and labor costs as well as lawsuits from landlords. The chain now operates just six locations, down from its peak.

Other small craft beer establishments have faced similar struggles. Zydeco Brew Works, based in Ybor City, Florida, filed for Chapter 11 bankruptcy in January 2023, closing its main brewery and restaurant location. Michigan-based Griffin Claw Brewing Co. also filed for Chapter 11 on July 26 to resolve an ownership dispute.

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World of Beer Files for Chapter 11 Bankruptcy

World of Beer, a notable competitor to Yard House and BJ’s, filed for Chapter 11 bankruptcy on August 2. The Tampa, Florida-based chain cited rising interest rates, lease obligations, inflation, and slow recovery in dining habits as reasons for its financial difficulties. The company’s parent, WOB Holdings, and 11 affiliates filed in the U.S. Bankruptcy Court for the Middle District of Florida.

At its peak, World of Beer operated 75 locations across 20 states and even opened a franchise in Shanghai, China, in 2016. However, the company has since closed more than half of its locations, with only 34 still listed on its website. In the 12 months leading up to the bankruptcy filing, 14 locations were shuttered.

In some cases, World of Beer locations were rebranded rather than closed. In May 2017, three franchise locations in Virginia were transformed into Crafthouse by their owner, Evan Matz, as part of an effort to pivot the business.